| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2097.2B | ¥1967.7B | +6.6% |
| Operating Income / Operating Profit | ¥188.3B | ¥102.6B | +83.5% |
| Ordinary Income | ¥202.2B | ¥114.4B | +76.8% |
| Net Income / Net Profit | ¥129.3B | ¥88.4B | +46.3% |
| ROE | 7.7% | 5.8% | - |
For the fiscal year ended March 2026, Revenue was ¥2,097.2B (YoY +¥129.5B +6.6%), Operating Income was ¥188.3B (YoY +¥85.7B +83.5%), Ordinary Income was ¥202.2B (YoY +¥87.8B +76.8%), and Net Income attributable to owners of the parent was ¥129.3B (YoY +¥40.9B +46.3%), delivering higher revenue and substantial profit growth. Operating margin improved to 9.0% (from 5.2% the prior year, +3.8pt), and net margin rose to 6.2% (from 4.5%, +1.7pt), reflecting a material improvement in profitability; gross margin expanded to 20.9% (from 17.4%) (+3.5pt). A change in depreciation estimates in the Metals segment (extension of useful life following extension of mineable years, benefiting Operating Income by ¥12.3B) contributed to profitability improvement, while the Real Estate business’s sharp revenue +64.9% and Operating Income +97.7% drove an improved profit mix. Non-operating items included dividend income of ¥14.3B and foreign exchange gains of ¥13.0B, boosting Ordinary Income. Extraordinary gains included ¥24.9B from the sale of investment securities, resulting in a final Net Income increase of 46.3% YoY.
[Revenue] Revenue was ¥2,097.2B (YoY +6.6%), with all five segments reporting revenue growth. By segment, Metals accounted for ¥1,202.9B (+5.5%), representing 57.4% of revenue; Ore was ¥682.2B (+4.9%, 32.5% share) and ranked second. Machinery & Environment was ¥168.0B (+7.5%), Real Estate surged to ¥47.5B (+64.9%), and Renewable Energy was ¥18.7B (+6.0%). Real Estate increased by ¥19.2B from ¥28.8B the prior year, ranking highest in growth rate despite a small share. Overall top-line benefited from favorable resource prices and FX, and expansion in higher-margin segments improved the sales mix.
[Profitability] Cost of sales was ¥1,659.0B (YoY +2.1%), rising less than revenue (+6.6%), expanding gross profit to ¥438.2B (from ¥342.3B, +¥95.9B +28.0%). Gross margin improved to 20.9% (from 17.4%, +3.5pt). SG&A was ¥249.9B (from ¥239.7B, +¥10.2B +4.3%), increasing at a lower rate than sales and reducing the SG&A ratio to 11.9% (from 12.2%, -0.3pt). As a result, Operating Income rose substantially to ¥188.3B (YoY +83.5%), with Operating Margin improving to 9.0% (from 5.2%, +3.8pt). Non-operating income included dividend income ¥14.3B and FX gains ¥13.0B; subtracting non-operating expenses of ¥27.3B (including interest expense ¥7.1B) from non-operating income ¥41.2B produced Ordinary Income of ¥202.2B (YoY +76.8%). Extraordinary gains included ¥24.9B from sale of investment securities; after extraordinary losses of ¥6.1B (impairment losses ¥2.0B, loss on disposal of fixed assets ¥2.9B, etc.), profit before income taxes totaled ¥226.9B. Income taxes ¥64.6B (effective tax rate 28.5%) and Net Income attributable to non-controlling interests ¥21.9B were deducted, resulting in Net Income attributable to owners of the parent of ¥129.3B (YoY +46.3%). In conclusion, revenue growth and significant profit expansion were driven by improved gross margin and operating leverage from SG&A control.
The Ore segment posted Revenue ¥682.2B (YoY +4.9%) and Operating Income ¥80.1B (YoY +10.4%), maintaining an 11.7% margin and contributing the most to consolidated Operating Income. The Metals segment reported Revenue ¥1,202.9B (+5.5%) and Operating Income ¥67.4B (from ¥9.4B prior year, +613.7%), a dramatic recovery with margin improving to 5.6%. This sharp recovery includes the effect of depreciation estimate changes (extension of useful life) contributing +¥12.3B to Operating Income. Machinery & Environment recorded Revenue ¥168.0B (+7.5%) and Operating Income ¥20.8B (+0.7%), with a 12.4% margin and stable performance. Real Estate achieved Revenue ¥47.5B (+64.9%) and Operating Income ¥33.2B (+97.7%), delivering an exceptionally high margin of 69.8%. Renewable Energy reported Revenue ¥18.7B (+6.0%) and Operating Income ¥6.5B (+35.2%), with a 34.5% margin, growing into a high-profitability portfolio. The high margins in Real Estate and Renewable Energy improved the company-wide profit mix, while the substantial recovery in Metals drove overall profit growth.
[Profitability] Operating Margin improved to 9.0% (from 5.2%, +3.8pt), supported by Gross Margin 20.9% (from 17.4%, +3.5pt) and SG&A ratio 11.9% (from 12.2%, -0.3pt). ROE was 7.7%, up 1.3pt from 6.4% the prior year. Net Margin improved to 6.2% (from 4.5%, +1.7pt), helped by the Metals depreciation estimate change and the high margins in Real Estate. ROA on an Ordinary Income basis was 7.3% (from 4.9%), reflecting improvement in both asset efficiency and margins.
[Cash Quality] Operating Cash Flow (OCF) was ¥75.8B, representing a cash conversion ratio of 0.59x against Net Income ¥129.3B, remaining low. Inventory increase of -¥161.5B and accounts receivable increase of -¥67.9B absorbed working capital; EBITDA was ¥262.8B (Operating Income ¥188.3B + Depreciation ¥74.5B), and the OCF/EBITDA ratio was 0.29x, indicating delayed cash conversion. Accrual ratio was 2.1%, suggesting accrual-based profit recognition is broadly at an appropriate level.
[Investment Efficiency] Capital expenditures were ¥327.6B, 4.4x depreciation ¥74.5B, reflecting progress on major investment projects. Construction in progress amounted to ¥478.1B (15.4% of total assets), a high level; improving asset turnover upon commissioning will be key. Total asset turnover was 0.68x, roughly flat, with accumulated investments suppressing efficiency.
[Financial Soundness] Equity Ratio was 54.0% (from 58.9% prior year), a slight decline but still sound. Current Ratio was 183.9% and Quick Ratio 166.3%, indicating sufficient short-term liquidity. Debt/Equity was 0.35x and interest-bearing debt ratio 29.9%, maintaining a conservative capital structure. Long-term borrowings rose to ¥447.2B from ¥97.7B prior year, reflecting long-term financing for major investments. Interest Coverage was 26.6x (Operating Income / Interest Expense), indicating strong capacity to service interest.
Operating Cash Flow was ¥75.8B (from ¥177.1B prior year, -57.2%), with Net Income ¥140.3B (¥129.3B attributable to owners of the parent + ¥21.9B non-controlling interests) producing a cash conversion ratio of 0.54x, low. Operating cash flow subtotal (pre-working capital changes) was ¥105.1B; inventory increase -¥161.5B and receivables increase -¥67.9B absorbed working capital, partly offset by payables increase +¥85.4B. After tax payments -¥44.7B, interest and dividend receipts +¥16.3B, and interest payments -¥6.5B, OCF totaled ¥75.8B. Investing Cash Flow was -¥328.3B, mainly capital expenditures -¥327.6B tied to the buildup of construction in progress. As a result, Free Cash Flow was deeply negative at -¥252.5B. Financing Cash Flow was +¥317.3B, funded by long-term borrowings ¥342.1B, and after dividend payments -¥39.4B and short-term debt repayments, net financing remained substantially positive. Cash and deposits increased to ¥434.6B (from ¥380.6B, +¥54.0B), indicating long-term borrowings were used to fund the major investment phase. Relative to EBITDA ¥262.8B, OCF ¥75.8B (OCF/EBITDA 0.29x) underscores weak cash generation; improving inventory reduction and bringing new investments into operation to enhance OCF are key issues.
Core recurring earnings are Operating Income ¥188.3B, derived from Gross Profit ¥438.2B less SG&A ¥249.9B. Non-operating income ¥41.2B comprised dividend income ¥14.3B, FX gains ¥13.0B, and other ¥3.3B; dividend income is stable recurring revenue while FX gains are volatile. Non-operating expenses ¥27.3B included interest expense ¥7.1B, FX losses ¥3.3B, and other ¥4.8B, resulting in net non-operating income of +¥13.9B that boosted Ordinary Income. Extraordinary gains ¥30.8B were mainly from sale of investment securities ¥24.9B (a one-off), and included insurance proceeds ¥11.2B. Extraordinary losses ¥6.1B comprised impairment losses ¥2.0B, loss on disposal of fixed assets ¥2.9B, and valuation losses on investment securities ¥1.2B, all one-off items. The ¥24.7B difference between Ordinary Income ¥202.2B and profit before income taxes ¥226.9B aligns with the net extraordinary items, and the gap between profit before tax and Net Income attributable to owners of the parent ¥129.3B is explained by income taxes ¥64.6B and non-controlling interests ¥21.9B. Accrual ratio at 2.1% is low, indicating generally good accrual-based earnings quality; however, OCF/Net Income 0.54x and OCF/EBITDA 0.29x highlight delayed cash conversion driven mainly by inventory and receivables increases. Future working capital management will be critical to converting earnings into cash.
The company’s plan calls for Revenue ¥2,325.0B (YoY +10.9%), Operating Income ¥140.0B (YoY -25.6%), Ordinary Income ¥115.0B (YoY -43.1%), and Net Income attributable to owners of the parent ¥120.0B (YoY -7.2%), indicating a revenue-increase but profit-decline outlook. Year-to-date progress rates versus the full year plan are Sales 90.2%, Operating Income 134.5%, and Ordinary Income 175.8%, indicating a first-half-weighted progression. The planned decline in Operating Income appears to incorporate depreciation smoothing (including the reversal of the current period’s estimate change effect of +¥12.3B), conservative resource price and FX assumptions, and startup costs for new investments. The large decline planned for Ordinary Income likely assumes reduced non-operating income (variability in FX gains and dividend income). The relatively smaller decline in Net Income may reflect an assumption of reduced extraordinary gains alongside a lower tax burden. DPS is ¥31 (annual), with a planned Payout Ratio of 20.3% (on a plan basis), indicating a moderate dividend while retaining earnings for investment. Achieving the full year plan depends on second-half revenue build and expense control, and on the commissioning of construction in progress to contribute to depreciation and Operating Income.
Dividends were disclosed as an interim of ¥117 and a year-end of ¥48, totaling ¥165 (pre-share-split basis); following a 5-for-1 stock split effective October 1, 2025, the disclosed year-end dividend is ¥48 post-split. The effective annual dividend payout was ¥3,954 million, yielding a payout ratio of 41.0% against Net Income attributable to owners of the parent ¥129.3B. Free Cash Flow was -¥252.5B, below total dividends, resulting in an FCF coverage of -1.91x and indicating dividends were not covered by internal funds. The company is in a major investment phase and funded ¥342.1B via long-term borrowings. Share buybacks were negligible in the cash flow statement (-¥0.0B), and the Total Return Ratio equals the payout ratio at 41.0%. The plan for next fiscal year is an annual dividend of ¥31 (post-split basis; equivalent to ¥155 pre-split), representing a payout ratio of 20.3% against planned Net Income ¥120.0B, a more restrained level than this year. Dividend sustainability depends heavily on improving OCF (inventory reduction and ramp-up of new projects) and external financing capacity; the company appears to prioritize stable dividends while balancing investment cash demand.
Metals price and FX volatility risk: The Metals segment represents a high concentration at 57.4% of revenue (¥1,202.9B), so movements in copper prices and FX rates directly impact results. This period benefited from FX gains ¥13.0B, but reverse movements pose material downside risk. Metals Operating Income recovered to ¥67.4B (+613.7% from ¥9.4B), but excluding the one-off depreciation estimate benefit of +¥12.3B, results are highly sensitive to price and FX conditions. Debt/EBITDA 2.37x and Interest Coverage 37.2x indicate strong financial resilience, but earnings volatility across cycles may increase.
Risk of delays/cost overruns in major investment projects: Construction in progress ¥478.1B (15.4% of total assets) and CapEx ¥327.6B indicate large ongoing investments. Work-in-progress inventory ¥201.7B is substantial; project delays or cost overruns could cause impairment risk or delayed cash inflows upon commissioning. Free Cash Flow -¥252.5B is deeply negative; if OCF improvement lags, liquidity risk may materialize.
Working capital expansion and cash conversion risk: Low cash conversion metrics—OCF/Net Income 0.54x and OCF/EBITDA 0.29x—reflect working capital absorption from inventory increase -¥161.5B and receivables increase -¥67.9B. Days Sales Outstanding (DSO) for receivables is 74 days and elongated; inventory valuation losses or bad-debt risk could rise during demand swings. Inventory reduction and receivables management are critical to OCF improvement, but project progress may also cause further working capital expansion.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.0% | 6.1% (2.6%–11.6%) | +2.9pt |
| Net Margin | 6.2% | 3.9% (2.2%–9.8%) | +2.2pt |
Operating Margin 9.0% exceeds the industry median 6.1% by 2.9pt, and Net Margin 6.2% also exceeds the median 3.9% by 2.2pt. Profitability ranks in the upper range of the industry, supported by high-margin Real Estate and Renewable Energy segments.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.6% | 3.3% (-0.3%–6.3%) | +3.3pt |
Revenue growth 6.6% outperforms the industry median 3.3% by 3.3pt, placing the company among the higher-growth peers, driven by Metals recovery and Real Estate expansion.
※ Source: Company compilation
The improvement in Gross Margin (+3.5pt) and Operating Margin (+3.8pt) was driven by the Metals depreciation estimate change (+¥12.3B) and the rapid expansion of Real Estate (Operating Income +97.7%, margin 69.8%). Going forward, the sustainability of profitability will hinge on metals prices and FX trends and the contribution from new investments coming into operation. ROE 7.7% is likely around the company’s cost of capital; improving total asset turnover from 0.68x (via commissioning of ¥478.1B construction in progress and inventory reduction) is the main lever to further ROE upside.
Cash conversion is weak (OCF/Net Income 0.54x; OCF/EBITDA 0.29x), with inventory increase -¥161.5B and receivables increase -¥67.9B absorbing working capital. Free Cash Flow -¥252.5B was financed by long-term borrowings ¥342.1B; while the payout ratio of 41.0% is moderate, FCF coverage -1.91x indicates internal funds do not cover dividends. Cash demand will persist through the investment cycle until projects pass peak capex.
Next year’s guidance is conservative—revenue up but profit down (Operating Income -25.6%, Ordinary Income -43.1%)—reflecting depreciation smoothing, conservative price and FX assumptions, and reduced non-operating income. The timing of commissioning of construction in progress ¥478.1B and progress on inventory adjustments are key to achieving guidance, and constitute upside/downside risks. Given Metals accounts for 57.4% of revenue, close monitoring of resource prices and FX sensitivity is essential.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.